June 12, 2018

What is the best way to measure a delivery fleet’s efficiency?

What is the best way to measure a delivery fleet's efficiency

Successfully managing a delivery fleet can be overwhelming. Not only should you have a solid understanding of fleet management, but you must also learn how to make data-driven business decisions that will maximize the efficiency of your fleet.

This requires you to be familiar with specific key performance indicators or KPIs. Here are a few examples of the KPIs that you need to track:

Fleet capacity utilization

Capacity utilization is directly tied to the ROI potential of each trip.

It can be measured by dividing the used capacity by the total carrying capacity of your vehicle.

For example, if your truck has a total capacity of 3,000 pounds and the delivery is only 2,300 pounds, then the capacity utilization would be:

2,300 ÷ 3,000 = 0.766 or 77%

As far as fleet efficiency goes, this value means that the business has legroom for an improvement of 23% through capacity utilization alone.

Realistically, it’s impossible to reach a capacity utilization of 100%, especially for fleets with hundreds of trucks at their disposal. In fact, the average utilization for fleets is generally around 50%, which is why an average capacity utilization of 80% or more is already regarded as efficient.

Cost per mile

The next metric you need to focus on is the total cost of each mile traveled by your trucks.

Besides the cost of salaries, your cost per mile should include several variable and fixed costs:

Variable costs

  • Tires
  • Fuel
  • Repairs
  • Driver meals and lodging
  • Taxes

Fixed costs

  • Truck Lease Payments
  • Insurance
  • Permits

To calculate your per-mile cost of these expenses, you must first get your total loaded and deadhead miles in a year (or month). For example, if your total fixed costs amount to $3,000 in a 10,000-mile month, then your fixed per-mile cost for that month is:

3,000 ÷ 10,000 = $0.3 per mile

Repeat the same calculation with your variable costs and salaries to get the total cost per mile of your fleet.

Planned vs. unplanned stops ratio

A typical delivery includes several planned stops, but drivers often make additional stops that delay the entire route plan.

This could be due to flattened tires, engine breakdowns, accidents, and various activities that the driver engages in, like taking emergency bathroom breaks or having a snack. Whatever the reason, extra stops don’t bode well for the efficiency of delivery fleets.

That’s why you need to calculate the percentage of planned stops out of all the actual stops drivers take.

For example, if a driver was allotted 50 stops but instead took a total of 60, he or she has a planned stop percentage of:

50 ÷ 60 = 0.83 or 83%

Average service time

Delivery fleets need to be particularly vigilant of their average service time, which encompasses every minute spent loading and unloading vehicles. (Take note that this doesn’t include the actual travel time during deliveries.)

A straightforward way to calculate this KPI is to get the weekly average for all trips. Under normal circumstances, anywhere around 15 minutes per delivery should be acceptable, while a service time that nears or exceeds 30 minutes can already be considered inefficient.

If you notice that the total service time for one particular load significantly exceeds your average, then it might be a good idea to investigate the details of the trip as well as the driver involved.

Keeping track of anomalies and optimizing processes will improve efficiency.

Optimizing your delivery fleet

Now that you know some of the most important metrics for delivery fleets, it’s time for the actual strategies that will help you track, interpret, and utilize them for your optimization efforts.

1. Using a fleet management software

With a robust fleet management software system, tracking data such as fuel purchases and vehicle idling time can be done from a single interface.

The KeepTruckin ELD solution, for example, is the all-in-one compliance and fleet management platform that enables fleet managers to have a bird’s eye view on every important detail. They can quickly see the driver’s location history, break times, remaining hours of service, and much more.

The KeepTruckin ELD ecosystem also allows fleets to track their drivers’ performance via the integrated driver scorecard system, which is essential for the next strategy that will help you scale the efficiency of your delivery fleet.

2. Monitoring driver performance

Drivers have a pivotal role when it comes to ensuring the efficiency and effectiveness of delivery fleets.

Problematic driving habits like hard braking and hard cornering, for example, are one of the major causes of road accidents.

KeepTruckin actively monitors “safety events” that include hard braking, hard acceleration, hard cornering, and speeding — all of which contribute to the natural wear and tear of vehicle components aside from the possibility of fatal road mishaps. This enables you to identify drivers who need coaching and assistance.

Also, aggressive driving lowers a vehicle’s gas mileage by 33% at highway speeds, which means irresponsible drivers cost you multiple variable expenses in the form of potential repairs, maintenance, and fuel costs.

To provide you with even more profound and in-depth insights, KeepTruckin has recently launched the KeepTruckin Smart Dashcam.

The KeepTruckin Smart Dashcam is an easy-to-use “plug n play” solution that seamlessly integrates with the KeepTruckin ELD. When a critical event such as a hard brake or accident is detected, the Smart Dashcam captures an HD video clip of 10 seconds before and after the event and transmits it to the KeepTruckin Dashboard for real-time viewing.

By seeing what exactly happened from the driver’s perspective, you get the context that you need to make better decisions.

For more information on the KeepTruckin Smart Dashcam and how it improves the efficiency and safety of your fleet, check out Smart Dashcam.

3. Vehicle utilization

Finally, KeepTruckin has a built-in utilization tracker that provides fleet managers with a bird’s-eye view of the utilization for each vehicle or driver.

The utilization page also highlights the exact values of the total idling and driving times for all vehicles equipped with KeepTruckin ELDs — thus, helping you understand your fleet’s efficiency from various angles and determine which areas are in dire need of improvements.

On average, long-haul truckers burn $4,500 in fuel cost per year by idling alone, which is an issue that can be remedied through proper communication between drivers and fleet managers.

In addition to utilization, KeepTruckin also detects fault codes such as low tire pressure, inaccurate speed data, and other issues that may affect fuel efficiency and daily operations.

By staying on top of these things with the help of the KeepTruckin ELD, fleets can avoid unnecessary downtimes and costly repairs.

Conclusion

Remember that improving efficiency requires the collective efforts of fleet managers, drivers, and everyone else in the company.

By understanding the metrics and strategies mentioned above, any fleet can set clear goals that would help them minimize costs and maximize profits.

You can buy the KeepTruckin ELD online and start improving your fleet’s efficiency today.

If you have any questions about the KeepTruckin ELD, give us a call at 855-434-ELOG or send us an email at support@keeptruckin.com. Our 24/7 active customer support team is always available to help you.

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